Finance Rating

Jan 27, 2011 (LBO) – Sri Lanka’s Arpico Finance Company’s long-term rating has been confirmed at BB and its outlook lifted ‘positive’ from ‘stable’ on better asset quality and adequate capital, RAM Ratings said. Arpico Finance’s short-term rating has been confirmed at NP, RAM Ratings said.

Outlook on the long-term rating has been revised to positive from stable.

“The company’s ratings are supported by its better-than average asset quality and adequate capital base,” RAM Ratings said in a statement.

“However, the ratings are weighed down by high overheads.”

Established in 1951, Arpico is the second-oldest registered finance company in the island but has remained small, accounting for less than one percent of the industry’s total assets as at end-March 2010.

The Company’s gross non-performing loans (NPL) ratio improved to 3.08 percent of total loans as at end-August 2010, from 4.83 as at end- March 2009.

Arpico has managed to bring down gross NPLS from high levels seen in 2004 despite a harsh economic climate while others in industry reported worsening bad loans,
RAM Ratings said.

“Adequate provisioning has permitted Arpico to record a better net NPL
ratio of 1.26 percen